Correlation Between Fastighets and SBB-B

Can any of the company-specific risk be diversified away by investing in both Fastighets and SBB-B at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fastighets and SBB-B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fastighets AB Balder and Samhllsbyggnadsbolaget i Norden, you can compare the effects of market volatilities on Fastighets and SBB-B and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fastighets with a short position of SBB-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastighets and SBB-B.

Diversification Opportunities for Fastighets and SBB-B

0.49

Correlation Coefficient

Fastighets  SBB-B

Very weak diversification

The 3 months correlation between Fastighets and SBB-B is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fastighets AB Balder and Samhllsbyggnadsbolaget i Norde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhllsbyggnadsbolaget and Fastighets is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fastighets AB Balder are associated (or correlated) with SBB-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhllsbyggnadsbolaget has no effect on the direction of Fastighets i.e., Fastighets and SBB-B go up and down completely randomly.

Pair Corralation between Fastighets and SBB-B

Assuming the 90 days trading horizon Fastighets AB Balder is expected to generate 0.44 times more return on investment than SBB-B. However, Fastighets AB Balder is 2.3 times less risky than SBB-B. It trades about 0.05 of its potential returns per unit of risk. Samhllsbyggnadsbolaget i Norden is currently generating about -0.15 per unit of risk. If you would invest  7,956  in Fastighets AB Balder on September 3, 2024 and sell it today you would earn a total of  436.00  from holding Fastighets AB Balder or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fastighets AB Balder  vs.  Samhllsbyggnadsbolaget i Norde

Fastighets AB Balder

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fastighets AB Balder are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Fastighets is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhllsbyggnadsbolaget i Norden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fastighets and SBB-B

The main advantage of trading using opposite Fastighets and SBB-B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastighets position performs unexpectedly, SBB-B can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SBB-B will offset losses from the drop in SBB-B's long position.

The idea behind Fastighets AB Balder and Samhllsbyggnadsbolaget i Norden pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.